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United States v. Puerto Rico

The court holds that federal sovereign immunity bars an action initiated by the commonwealth of Puerto Rico's environmental agency in an effort to impose restrictions on the U.S. Navy's extraction of waters from a river. During World War II, the Navy obtained a permit from the commonwealth to extract water from a river and built a hydroelectric plant, control of which was later transferred to the commonwealth. In consideration of the transfer, the commonwealth issued the Navy a permit granting it the right to continue use of the water supply for as long as the Navy's project remained operational. More than 40 years later, the commonwealth told the Navy that under the commonwealth's water law, the Navy needed to update its permit. The commonwealth failed to do anything about the renewal application submitted by the Navy for 13 years, at which point it ordered the Navy to cease its operations because it was withdrawing water from the river without a permit. The Navy then sued the commonwealth seeking confirmation of its right to withdraw water from the river as embodied by its previous permits and argued that the administrative water proceedings infringed the sovereign immunity of the United States. The commonwealth claimed that the ongoing proceedings fell within the waiver of sovereign immunity effected by the McCarran Amendment, which waives the sovereign immunity of the United States in suits for the general adjudication or administration of water rights.

The court first holds that the McCarran Amendment does not waive federal sovereign immunity with respect to purely administrative proceedings, such as the one initiated by the commonwealth. In crafting the McCarran Amendment, the U.S. Congress consistently used the word suit to describe the matters affected by the statutory waiver of federal sovereign immunity. The presumption is that Congress knew, and purposefully embraced, the particularized meaning of suit that refers to an action in a judicial forum when it chose to employ the word in the text of the McCarran Amendment. Nothing in the language or structure of the McCarran Amendment rebuts this presumption, and Congress' use of other terms virtually compels the conclusion that the repeated references to suits were fully calculated. The law under which the commonwealth initiated proceedings against the Navy, however, contemplates a purely administrative proceeding that will ordinarily terminate with a final order by the secretary of the environmental agency. Although a proceeding under the law leaves open the possibility of judicial review, that does not transmogrify the underlying proceeding into a suit. Because a proceeding under the law contains no significant judicial component, it is not equivalent to a suit and the McCarran Amendment does not apply. Thus, federal sovereign immunity bars the proceeding that the commonwealth seeks to launch against the Navy.

The full text of this decision is available from ELR (22 pp., ELR Order No. L-507).